What is your net worth?
If someone asks me that question and I feel brave enough to answer, I can do so in mere seconds. It’s because I’m using Mint’s free budgeting website and android app. Mint tracks all of my financial accounts, including investments and student loans (ouch).
But why would an attractive person like you need to know what’s going on with your cash? Here are five reasons.
5. Anxiety Reduction
Ignorance is not bliss in the financial world. It doesn’t feel good to be in some unknown level of financial peril. Like with everything else, ignoring financial problems ensures that they remain unsolved and this knowledge will eat away at you! If you know your finances inside and out, you can come up with targeted, effective ways to get out of debt and even save up for a kindle or to take one of the 500 greatest trips.
Anxiety is reduced with a budget because you have greater control over your cash flows. Unnecessary impulsive purchases will be exposed while expected needed funds (a new car when ol’ trusty goes down) will be there when you need them. Many non-budgeters think that budgets restrict spending, but in practice they free your spending. You’ll be able to buy the things you really want because you’re not wasting money.
3. Flexibility Allows For Increased Creativity
Budgets are completely flexible. You can have a simple budget that limits one area of problem spending or you can have a budget that accounts for ALL spending. This flexibility allows for and encourages creativity with your finances. You can create budget categories such as “concert fund” if you enjoy seeing concerts. Freely give and take between categories as you see fit. Eat less expensive food and spend more on knitting supplies? Sounds horrible, but it’s your choice!
2. You’ll Do Better Financially
Blind men make for poor guides.
1. It’s FUN!
Budgets are supposedly a boring hassle, but if you filter all of your purchases through your credit card, as you should, and use a free application like Mint, you won’t need to track expenses or keep receipts because it’s automatically tracked and categorized for you! If it’s this easy, you’re left with a choice of tracking where your money goes or not. Which option is more fun?
In a muddled, no-budget lifestyle, your decisions will be impulsive and emotional because you don’t have the facts. Purchases made this way are much less satisfying and worrisome because you’ll always wonder, “should I be buying this, can I afford it, and how does it affect my other financial goals?”
But budgets give you varying amounts of money for different purposes, all your personal choice. It results in satisfying, calculated purchases. When you buy that big screen TV, you know you can afford it. You can finally watch Seinfeld reruns guilt-free.
Financial Ignorance Scenarios Are Lose/Lose
- If you’re better off than you believe, you’re worrying for no reason.
- If you’re worse off than you believe, you’re spending money you don’t have.
Knowing your complete financial picture allows you to enjoy your financial cushion and/or directly address any weaknesses.
Do you budget? Why or why not? Share your experience with budgeting in the comments.